RBA raises inflation forecasts. Oil fell below $90 a barrel for the first time since February

The US Labor Department reported yesterday that about 260,000 people filed unemployment claims during the previous week, 6,000 more than the previous week. The Nonfarm Payrolls report today will also serve as an overview of the Federal Reserve’s likely path for monetary policy, as the Central Bank emphasized labor market strength as evidence that the economy remains resilient and capable of resisting further rate hikes.

Fed spokeswoman Loretta Mester said yesterday that she would like to see the rate rise to just above 4% at the end of the interest rate cycle. However, analysts predict that the Fed will stop at 3.5-3.75%. Mester added that the Fed could raise rates by 75 bps in September, but it could well be 50 bps, with the Committee guided by inflation and labor market data.

Coinbase stock jumped more than 40% yesterday. The cryptocurrency exchange announced a partnership agreement with BlackRock (BLK) to provide institutional clients access to cryptocurrency trading and storage services.

The Bank of England raised its interest rate by 0.5% as expected. The rate is now at 1.75%, higher than the ECB (0.5%) but lower than the US Federal Reserve (2.5%), the Canadian Central Bank (2.5%), and the Reserve Bank of New Zealand (2.5%). Having made its most significant rate hike in nearly 30 years, the Bank of England suggested that it may be less decisive in raising rates in the coming months. The report also indicates that under the weight of skyrocketing inflation, the UK will be in recession for more than a year.

Russia is beginning to drag out the process of launching the Nord Stream 1 pipeline. Moscow is demanding additional documents confirming that the equipment used in the repairs is not subject to sanctions. Thus, the energy problems in Europe are exacerbated.

On Thursday, US crude oil prices fell below $90 a barrel for the first time since Russia invaded Ukraine. The drop to its lowest level since February was driven by lingering fears that global growth slow would hurt oil demand. Fears of a recession intensified after the Bank of England warned of a prolonged recession and expectations of a one-year recession.

Saudi Arabia and the UAE are ready to provide a “significant increase” in oil production only if winter’s global supply crisis worsens.

Gold prices reached their highest level a month after rising more than 1.5% yesterday. A weaker dollar helped support gold even as US Treasury yields rose.

Asian markets traded higher yesterday. Japan’s Nikkei 225 (JP225) gained 0.69%, Hong Kong’s Hang Seng (HK50) jumped by 2.06%, and Australia’s S&P/ASX 200 (AU200) was down by 0.01%. Asian stock indices rebounded strongly after several declines, as strong earnings reports in the US boosted optimism about the corporate outlook. Investors in the region are preparing for a slew of earnings reports next week from Chinese, Japanese, and South Korean companies.

The Monetary Policy report from the RBA showed that Australia’s economy would slow down sharply soon due to a sharp rise in inflation. A full percentage point cut economic growth forecasts for this year to 3.25%, and for 2023 and 2024 by about a quarter point to 1.75%. The inflation forecast has also increased from 5.9% to 7.75%, requiring further interest rate increases.